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SVODs can’t skip their churn

tablet with SVOD service appsThe Wall Street Journal highlights a story that really shouldn’t surprise anyone with experience in media business – a high level of SVOD subscribers only sign up for the months in which their favorite series are released. “Churn” has been around along as HBO or other premium channels have existed. But, it does seem to bring surprise to SVOD/OTT companies and digital investors who again may have skipped over a lesson which traditional TV has for them.

That churn is at all a surprise is almost as laughable as a recent conference marketing piece. This promotes a keynote by an SVOD representative who will discuss how “TV is becoming the center of our culture.” Becoming??? I realize SVOD companies are young, but do they really have no idea that TV has been the primary shaper of culture since the late 1950s? But I digress…

One of the main drawbacks of the “full season release” strategy in use by many SVOD services is there is no incentive to stay around longer than the month of release. By enabling total bingeing, these services also make it easy for their subs to watch a whole season over one weekend. And if the subs are willing to wait, they can knock off several series in one month. As our local ShopRite stores used to say, “why pay more?”.

Perhaps not by coincidence, Amazon announced last week that it was raising the one-month Prime subscription by 20 percent (keeping the annual subscription the same). Although not directly mentioned, this move no doubt is at least a partial reaction to people dipping into Prime Video month-by-month.

Churn, churn, churn

A certain number of people will always search out ways to reduce their costs. Others can’t be bothered and keep subscriptions forever, even when it’s not being used – making the subscription model work. The digital media services will need to learn to live with this, just like old media has had to for many decades.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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